Approved: extension application to be submitted in April 2018

[mig2015]

Hi

Tier 1E (200K route, deadline May) team is going to submit an application for extension in less than a month, I need to ask a few questions.

Investment has been made in form of Director Loan, several bank transfers from directors' personal UK bank account to the business account. These investments are appearing in relevant set(s) of annual accounts, as following:

BALANCE SHEET as at XX.YY.2017
-------------------------------------------------
[..]

Notes to the financial statements

1 Directors' benefits: advances, credit and guarantees
One of the two directors, Mr A, has made the following investments as director loans to
XX Ltd:

mm/dd/yyyy £transaction 1
mm/dd/yyyy £transaction 2

.
.
.
-------
total: ££

The second director, Mr B, has made the following investments as director loans to
XX Ltd:

mm/dd/yyyy £transcation I
mm/dd/yyyy £transcation II

.
.
.
------
total: ££

These investments in the form of directors' loans are unsecured and subordinated in favour of third party
creditors.



Q1. Is this the correct wording for the purpose, and is this the only part of accounts that must reflect them?


Also, the two directors made those transfers within 3 years. The year end is June, so I understand management accounts is required.

Q2. Would it be only the Management Accounts that we need to submit with the extension application, or all the three sets of accounts?


Company's 2nd year accounts will be submitted with Companies House in a few days (they are due by end of March), and management accounts will be submitted at some point before end of March. Then extension application is meant to be submitted in the first week of April.

Q3. Are we missing something crucial with regards to the timings?


Thanks

[marcnath]

Q1. Yes, those wordings seem ok. Of course, you need the DL agreement and bank statements in addition. There has been a less noticed change in the immigration rules this year - it states that the team members need to have equal investments (not the exact wording, but that appears to be the end result).
Q2. The management accounts would be sufficient. If all the investment has been made before the last year end and it shows in last year's account, that would be sufficient. Only one set of accounts is sufficient - as long it shows the full investment.
Q3. No

[mig2015]

Q1. Yes, those wordings seem ok. Of course, you need the DL agreement and bank statements in addition. There has been a less noticed change in the immigration rules this year - it states that the team members need to have equal investments (not the exact wording, but that appears to be the end result).
Q2. The management accounts would be sufficient. If all the investment has been made before the last year end and it shows in last year's account, that would be sufficient. Only one set of accounts is sufficient - as long it shows the full investment.
Q3. No

Thanks marcnath. I get back to you on the above points one by one.


Meanwhile, the wording of the Report page on the Accounts appears exactly as per below:



XX LTD

ACCOUNTANTS' REPORT TO THE BOARD OF DIRECTORS ON THE PREPARATION
OF THE UNAUDITED STATUTORY FINANCIAL STATEMENTS OF XX LTD
FOR THE YEAR ENDED dd mm yyyy

----------------------------------------------------------------

In order to assist you to fulfil your duties under the Companies Act 2006, we have prepared for your approval the financial statements of XX Ltd for the year ended dd mm yyyy which comprise the Profit and Loss Account and the Balance Sheet from the company’s accounting records and from information and explanations you have given us.

This report is made solely to the board of directors of XX Ltd, as a body, in accordance with the terms of
our engagement letter dated dd' mm' 2016. Our work has been undertaken solely to prepare for your
approval the financial statements of XX Ltd and state those matters that we have agreed to state to the
board of directors of XX Ltd, as a body.To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than XX Ltd and its board of directors as a body, for our work or
for this report.
It is your duty to ensure that XX Ltd has kept adequate accounting records and to prepare statutory
financial statements that give a true and fair view of the assets, liabilities, financial position and profit of
XX Ltd. You consider that XX Ltd is exempt from the statutory audit requirement for the year.
We have not been instructed to carry out an audit or a review of the financial statements of XX Ltd. For
this reason, we have not verified the accuracy or completeness of the accounting records or information and
explanations you have given to us and we do not, therefore, express any opinion on the statutory financial
statements.


Do you think it's an okay form of Compilation Report if signed and stamped by the accountant?

[marcnath]

This looks like the standard form of the compilation report.

[mig2015]

Thank you marcnath. The last one not least, we have been named throughout the accounts by First Name Initial, and Full Last Name. I may ask the accountant to amend this to full first name too, if this gonna be problematic, otherwise do you think we can leave them as they are?

[kaps84]

Thank you marcnath. The last one not least, we have been named throughout the accounts by First Name Initial, and Full Last Name. I may ask the accountant to amend this to full first name too, if this gonna be problematic, otherwise do you think we can leave them as they are?

Full Name please to avoid any issues. (Since, it is easier to change now than getting into any issues due to this).

[marcnath]

Thank you marcnath. The last one not least, we have been named throughout the accounts by First Name Initial, and Full Last Name. I may ask the accountant to amend this to full first name too, if this gonna be problematic, otherwise do you think we can leave them as they are?

Immigration rules do specify what the form of identification is - only that it should be identifiable. So, that form with just initial and LAT name will meet the requirement especially when clubbed with other evidence such as dl agreement bank account statements etc.
But if it not too much trouble you may just as well change it.

[mig2015]

Thanks marcnath and kaps84 for valuable and quick advice, this is now amended.

One more thing which I'm unsure about, is that however the accountant submit the full accounts to HMRC, though they submit paper version to Companies House with only balance sheet pages (this won't contain investment notes, accountant report). Is this also okay?

[kaps84]

Your accounts only goes to companies house.

You need to include all the information in the accounts that is listed in the guidance. (investment or sharecapital against your name, complication report, etc.).

Generally speaking, you send two set of accounts for each year (one can be titled 'filletted' or 'abreviated' accounts and other titles 'Reports and Accounts'). Generally the first type (with less pages) goes to companies house electronically and does not bear any signatures. Second type of accounts is only for the director / company to keep in their records).

However, for your application perspective, you have to sign both set of accounts while submitting it to HO.

[marcnath]

Thanks marcnath and kaps84 for valuable and quick advice, this is now amended.

One more thing which I'm unsure about, is that however the accountant submit the full accounts to HMRC, though they submit paper version to Companies House with only balance sheet pages (this won't contain investment notes, accountant report). Is this also okay?

For your extension application, the only accounts that matter are the one you attach with your application - what you submit to HMRC and/or Companies house is immaterial.

Depending on your accounting date and the date of your application, it is possible you have not even submitted the accounts you provide with the application to Companies house

[mig2015]

Thanks again for your detailed views. Now it seems accounts are ready to be signed by both directors, and we also ask the accountant to sign and stamp the compilation report page.

It may look like a silly question, however as we submit two individual applications, we need two copies of accounts. Which one will make sense, that we make a photocopy of the above, or we and accountant sign two copies of the accounts?

[kaps84]

Since both are separate applications, both should have it's own set of Original documents (including accounts).

[mig2015]

Thanks Kaps84

[mig2015]

Q1. Yes, those wordings seem ok. Of course, you need the DL agreement and bank statements in addition. There has been a less noticed change in the immigration rules this year - it states that the team members need to have equal investments (not the exact wording, but that appears to be the end result).
Q2. The management accounts would be sufficient. If all the investment has been made before the last year end and it shows in last year's account, that would be sufficient. Only one set of accounts is sufficient - as long it shows the full investment.
Q3. No

Back to this comment, we have over 250 pages of business bank statements. It's honestly a dilemma, first is attaching all pages to the application and marking investment transactions, then having a first page with the list of all transactions' page numbers. The second, to pick only those pages which have a DL transaction on.
Also, on the business bank statements, what can been seen is XX LTD (our company name) only, not directors' names. Is this okay?

[marcnath]

Back to this comment, we have over 250 pages of business bank statements. It's honestly a dilemma, first is attaching all pages to the application and marking investment transactions, then having a first page with the list of all transactions' page numbers. The second, to pick only those pages which have a DL transaction on.

Just the pages with the DL transactions is fine.

Also, on the business bank statements, what can been seen is XX LTD (our company name) only, not directors' names. Is this okay?

This depends on when the investment was made. Before 19 Nov 2015, it is fine. After 19 Nov 2015, you need to show that this was from you to the business. So, for those investments, you are going to need to attach your personal bank statements that show the corresponding transactions

[mig2015]

my bad, sorry marcnath. What I actually meant here, was that the business bank statement itself is showing only company's name on the first page. For no such reason that I can remember, I feel the business bank statements must have director names as well as the company name on their first page.

Investment transactions themselves are carrying directors' account numbers as transaction reference. Digging to older posts about internal transactions, we got a letter from the branch confirming transactions are from directors' accounts - for each transaction it's mentioning account number, account holder's name, date and amount. We are optimistic this helps CW to see them as (so-called) "readily identifiable". However we will try to reflect this in covering letter as well. Do you believe this is still necessary to send personal statements that show the transactions to business bank account?

[marcnath]

my bad, sorry marcnath. What I actually meant here, was that the business bank statement itself is showing only company's name on the first page. For no such reason that I can remember, I feel the business bank statements must have director names as well as the company name on their first page.

Investment transactions themselves are carrying directors' account numbers as transaction reference. Digging to older posts about internal transactions, we got a letter from the branch confirming transactions are from directors' accounts - for each transaction it's mentioning account number, account holder's name, date and amount. We are optimistic this helps CW to see them as (so-called) "readily identifiable". However we will try to reflect this in covering letter as well. Do you believe this is still necessary to send personal statements that show the transactions to business bank account?

Ah ok. Bank statements don’t have directors names.
That documentation should be fine to meet the requirement

[mig2015]

Starting off with section 3B, and right at the beginning it asks bout "Name of Business(es)" and Companies House Reference Number. Throughout the initial 3 years we have been running only one limited company XX Ltd, and this has been known as YY as it's trade name. Is this correct if:

1) in the table we name the business as XX Ltd, and Reference number as Company registration number.
2) we explain the trade name being different to company name in covering letter.

Now, going through section K, I feel it's still necessary to double-check with respected members, so that I don't mess with the critical points here.

i) Because the investment has been in form of director loan, in K3, The investment was made during your initial period of Tier 1 (Entrepreneur) leave in the form of a director’s loan will be chosen

ii) K4, Did you demonstrate that any of these funds were invested in your business as part of your successful application for your last grant of leave?; however funds were shown in a bank account outside UK when acquiring initial Tier 1 visa, the third option, No none of the funds were shown in the previous application will be chosen. We came to the UK in 2015 and started our business roughly beginning of 2016, that's why I believe the third one is the correct choice.

iii) If all the above have been chosen correctly now table 3b1 must be dealt with. This is where it comes up with a few questions and confusions:

iv) The table will only allow 5 lines of transactions, now that there are, say 19 DL transactions, shall I add another 3 copies of this page?

v) The very last line, called Total column, do I need to total up the above 4 lines for every separate page, or shall I leave them blank and then total all of them up (200K) in one place and at the very last page, or another method?

vi) Where it says Audited/unaudited accounts provided plus shares if applicable, however investment is in form of DL only, this value must be Yes to all transactions?

vii) Then accordingly, Account compilation report provided with un-audited accounts is Yes to all transaction lines.

viii) Column Legal agreement (for Director's loan only), this very term Legal here is a bit confusing to me, as I can see throughout the forum, it has been the same to many other applicants too. What we have, is a DL agreement in one page and printed out on a simple A4 paper, signed by the two directors as individuals, and by them on behalf of the company. No witness, no measure to legalise it in any way. Hope it's still okay

[mig2015]

Q1. Yes, those wordings seem ok. Of course, you need the DL agreement and bank statements in addition. There has been a less noticed change in the immigration rules this year - it states that the team members need to have equal investments (not the exact wording, but that appears to be the end result).
Q2. The management accounts would be sufficient. If all the investment has been made before the last year end and it shows in last year's account, that would be sufficient. Only one set of accounts is sufficient - as long it shows the full investment.
Q3. No

for the Director Loan, I'm enclosing what we have to see if any respected member can spot anything inappropriate in wording (or even may suggest anything to be added). We borrowed the wording from the forum mostly, as well as the guidance. My apologies in advance, I know the forum is already fed up with and tired of such question.

Director Loan Agreement

This agreement is made and entered by between Mr A & Mr B independent persons and referred to as ‘Directors’ and XX LTD, which will be referred to as ‘the Company’ throughout this agreement.

In consideration of the covenant and condition hereinafter set forth, A and B – Directors and the Company agree as follows:

1 – Terms of Loan
This agreement commences from the date signed by Directors (i.e DDth MM 201X) . The Directors & Company may terminate the loan agreement at any time with mutual consent of both the parties except for payment due to third party creditors prior to date of such terminations. This explicitly and strictly means, that loans to third parties are to be fully repaid before the director's loan is repaid.

2 – Interest Rate
There is consensus among all parties that the Directors Loan is “Interest Free”.

3 – Tenure
The tenure of Loan Agreement will be for six years from the starting time of the agreement and renewable with the consensus of both the parties depending upon the profitability index of the enterprise.

4 – Loan Security
The Director’s Loan is unsecured and subordinated in favour of third party creditors. For the purpose of this agreement, subordinated loans rank after other debts, should the Company fall into liquidation or bankruptcy.

5 – Loan Amount
The outstanding balance of loan is amounting to no less than £200,000, and within 3 years from commencement of this agreement, this amount will be injected to the Company’s business bank account(s), in installments and through direct bank transfers from Director’s personal bank accounts.

6 – Confidentiality and Ownership
The loan agreement recognises and acknowledges the confidentiality of all financial and other information of the company obtained by directors during the performance of their duties and obligations


Executed this DD.MM.201X



Authorised Signatures
(Company Officials)



1. ____________________
A – Director

2. ____________________
B – Director

Authorised Signatures
(Lenders)

1. ____________________
A
(D.O.B: dd/mm/yyyy)



2. ____________________
B
(D.O.B: dd/mm/yyyy)


Moreover, appreciate any comment on below questions:

i) is there any suggestion for the date on the agreement? Company incorporated in the first few months of 2015, investments from beginning of 2016.
ii) can we attach copies of the agreement (as opposed to the original signed by ball pen), and keep the original for the company's records?

[mig2015]

Meanwhile that I'm raising questions with regards to section K of the attributes, there is another thing to be verified. We only have a CT603 letter from HMRC issued in 2017 to the company, a formal request to deliver a Company Tax Return. in the bottom of the letter, there is a gyro for the purpose of payment (which were not used for obvious reasons).

i) Can we use it as proof of "Business subject to UK taxation"?
if yes,
ii) shall we cut the payslip away from the dashed line prior to attaching it to the application?
iii) as it's a team application, shall we use the original in one application, and use a copy in the another, and mentioning this in the covering letter? (I cannot find any other letter from HMRC on our records unfortunately)

[kaps84]

Meanwhile that I'm raising questions with regards to section K of the attributes, there is another thing to be verified. We only have a CT603 letter from HMRC issued in 2017 to the company, a formal request to deliver a Company Tax Return. in the bottom of the letter, there is a gyro for the purpose of payment (which were not used for obvious reasons).

i) Can we use it as proof of "Business subject to UK taxation"? - Yes, you can
if yes,
ii) shall we cut the payslip away from the dashed line prior to attaching it to the application? - Don't bother about the gyro (payment slip).
iii) as it's a team application, shall we use the original in one application, and use a copy in the another, and mentioning this in the covering letter? (I cannot find any other letter from HMRC on our records unfortunately) - I am not sure on this but is there any other alternate?

Have you paid CT and file the CT return (CT600)?
Or Maybe you can also call HMRC (and companies house) and ask them to post some documents to you (maybe some tax payment statement, etc). But this might take time to be delivered. Companies house takes quite sometime.

[marcnath]

Starting off with section 3B, and right at the beginning it asks bout "Name of Business(es)" and Companies House Reference Number. Throughout the initial 3 years we have been running only one limited company XX Ltd, and this has been known as YY as it's trade name. Is this correct if:

1) in the table we name the business as XX Ltd, and Reference number as Company registration number.
2) we explain the trade name being different to company name in covering letter.
=> ok
Now, going through section K, I feel it's still necessary to double-check with respected members, so that I don't mess with the critical points here.

i) Because the investment has been in form of director loan, in K3, The investment was made during your initial period of Tier 1 (Entrepreneur) leave in the form of a director’s loan will be chosen
=> ok
ii) K4, Did you demonstrate that any of these funds were invested in your business as part of your successful application for your last grant of leave?; however funds were shown in a bank account outside UK when acquiring initial Tier 1 visa, the third option, No none of the funds were shown in the previous application will be chosen. We came to the UK in 2015 and started our business roughly beginning of 2016, that's why I believe the third one is the correct choice.
=> ok
iii) If all the above have been chosen correctly now table 3b1 must be dealt with. This is where it comes up with a few questions and confusions:

iv) The table will only allow 5 lines of transactions, now that there are, say 19 DL transactions, shall I add another 3 copies of this page?
=> You can use 3 copies or attach another sheet with just the table and mention in the form - see attached table. Either way feel free to total each page or 1 total in the last page.
v) The very last line, called Total column, do I need to total up the above 4 lines for every separate page, or shall I leave them blank and then total all of them up (200K) in one place and at the very last page, or another method?

vi) Where it says Audited/unaudited accounts provided plus shares if applicable, however investment is in form of DL only, this value must be Yes to all transactions?
=> ok
vii) Then accordingly, Account compilation report provided with un-audited accounts is Yes to all transaction lines.
=> ok
viii) Column Legal agreement (for Director's loan only), this very term Legal here is a bit confusing to me, as I can see throughout the forum, it has been the same to many other applicants too. What we have, is a DL agreement in one page and printed out on a simple A4 paper, signed by the two directors as individuals, and by them on behalf of the company. No witness, no measure to legalise it in any way. Hope it's still okay

=> ok

[marcnath]

Q1. Yes, those wordings seem ok. Of course, you need the DL agreement and bank statements in addition. There has been a less noticed change in the immigration rules this year - it states that the team members need to have equal investments (not the exact wording, but that appears to be the end result).
Q2. The management accounts would be sufficient. If all the investment has been made before the last year end and it shows in last year's account, that would be sufficient. Only one set of accounts is sufficient - as long it shows the full investment.
Q3. No

for the Director Loan, I'm enclosing what we have to see if any respected member can spot anything inappropriate in wording (or even may suggest anything to be added). We borrowed the wording from the forum mostly, as well as the guidance. My apologies in advance, I know the forum is already fed up with and tired of such question.

Director Loan Agreement

This agreement is made and entered by between Mr A & Mr B independent persons and referred to as ‘Directors’ and XX LTD, which will be referred to as ‘the Company’ throughout this agreement.

In consideration of the covenant and condition hereinafter set forth, A and B – Directors and the Company agree as follows:

1 – Terms of Loan
This agreement commences from the date signed by Directors (i.e DDth MM 201X) . The Directors & Company may terminate the loan agreement at any time with mutual consent of both the parties except for payment due to third party creditors prior to date of such terminations. This explicitly and strictly means, that loans to third parties are to be fully repaid before the director's loan is repaid.

2 – Interest Rate
There is consensus among all parties that the Directors Loan is “Interest Free”.

3 – Tenure
The tenure of Loan Agreement will be for six years from the starting time of the agreement and renewable with the consensus of both the parties depending upon the profitability index of the enterprise.

4 – Loan Security
The Director’s Loan is unsecured and subordinated in favour of third party creditors. For the purpose of this agreement, subordinated loans rank after other debts, should the Company fall into liquidation or bankruptcy.

5 – Loan Amount
The outstanding balance of loan is amounting to no less than £200,000, and within 3 years from commencement of this agreement, this amount will be injected to the Company’s business bank account(s), in installments and through direct bank transfers from Director’s personal bank accounts.

6 – Confidentiality and Ownership
The loan agreement recognises and acknowledges the confidentiality of all financial and other information of the company obtained by directors during the performance of their duties and obligations


Executed this DD.MM.201X



Authorised Signatures
(Company Officials)



1. ____________________
A – Director

2. ____________________
B – Director

Authorised Signatures
(Lenders)

1. ____________________
A
(D.O.B: dd/mm/yyyy)



2. ____________________
B
(D.O.B: dd/mm/yyyy)

=> looks fine
Moreover, appreciate any comment on below questions:

i) is there any suggestion for the date on the agreement? Company incorporated in the first few months of 2015, investments from beginning of 2016. anytime before first investment is ok [/ /highlight]
ii) can we attach copies of the agreement (as opposed to the original signed by ball pen), and keep the original for the company's records?

They specifically ask for originals. It will be returned

[mig2015]

Meanwhile that I'm raising questions with regards to section K of the attributes, there is another thing to be verified. We only have a CT603 letter from HMRC issued in 2017 to the company, a formal request to deliver a Company Tax Return. in the bottom of the letter, there is a gyro for the purpose of payment (which were not used for obvious reasons).

i) Can we use it as proof of "Business subject to UK taxation"? - Yes, you can
if yes,
ii) shall we cut the payslip away from the dashed line prior to attaching it to the application? - Don't bother about the gyro (payment slip).
iii) as it's a team application, shall we use the original in one application, and use a copy in the another, and mentioning this in the covering letter? (I cannot find any other letter from HMRC on our records unfortunately) - I am not sure on this but is there any other alternate?

Have you paid CT and file the CT return (CT600)?
Or Maybe you can also call HMRC (and companies house) and ask them to post some documents to you (maybe some tax payment statement, etc). But this might take time to be delivered. Companies house takes quite sometime.

Thanks for the advice, yes I was too under the same impression that a request from HMRC would take a few weeks, which may be quite unfit to the purpose as the application will be submitted in less than two weeks. What I have been hoping, is according to the following part from the guide, published Jan 18, page 108 :

Both team members will be relying on the same specified evidence, consequently
one applicant may provide a photocopy of the documentation instead of originals. If
applicable, you can accept photocopies under evidential flexibility.

I have noticed there are not, or I haven't bumped into many topics concerning team applications and duplicate of documents, maybe other respected members also kindly advise whether this can put the application in jeopardy.

[marcnath]

Meanwhile that I'm raising questions with regards to section K of the attributes, there is another thing to be verified. We only have a CT603 letter from HMRC issued in 2017 to the company, a formal request to deliver a Company Tax Return. in the bottom of the letter, there is a gyro for the purpose of payment (which were not used for obvious reasons).

i) Can we use it as proof of "Business subject to UK taxation"? ==> Yes
if yes,
ii) shall we cut the payslip away from the dashed line prior to attaching it to the application?==> Why ? But no issues if you want to
iii) as it's a team application, shall we use the original in one application, and use a copy in the another, and mentioning this in the covering letter? (I cannot find any other letter from HMRC on our records unfortunately)

==> Yes